Knowledge Management in Small and Medium Enterprises

Background

One of the most significant evolutions in the business environment over the past decade is the dawn of the new economy. The velocity and dynamic nature of markets has created a competitive incentive among many companies to leverage their knowledge assets as a means of creating value and achieving a competitive edge. The focus on knowledge management (KM) is a critical area also for small and medium sized enterprises (SMEs). In particular, the management of knowledge assets may provide small firms new tools for survival, growth and maintaining a sustainable competitive advantage (Omerzel and Antoncic, 2008). There is a general consensus in business practices and academia on the fact that SMEs are falling behind large companies in developing KM practices and benefits of KM has not fully exploited by these firms. This is reflected in a literature gap where little research efforts have been carried out on this topic. Indeed, to date, there is an abundance of literature describing how various large companies are successfully practicing KM, but the reasons why small firms show poor usage of KM tools are still unclear. In fact, little empirical studies have been conducted to identify the factors influencing KM adoption in SMEs (Finkl and Ploder, 2009). In addition, there is a growing need for qualitative analysis of the effects of knowledge management practices of networked SMEs (Valkokari and Helander, 2007). The potential which KM offers in improving efficiency and innovation has been cited as a key source of competitive advantage (MacKinnon et al., 2002). Despite this pressing need, it is widely accepted that small companies – even the most knowledge-intensive ones – are characterized by a lack of uptake of KM initiatives (Nunes et al., 2006). Perhaps due to the reason that KM systems are expensive to purchase, use and maintain. The aim of this study was to propose an alternative approach to developing KM systems for SMEs in developing economies. Instead of usual approaches, where KM needs heavy financial and other resources, study suggested solution centric approach (Patrick & Dotsika, 2007).